One of the tests facing the Chancellor of the Exchequer when he announces his budget next month is the current state of the labour market in the UK.
With unemployment low, high numbers of vacancies in a range of key sectors, and an increase in the over 50s having left their jobs for good, any plans for growing the economy must address the challenges currently being faced by many employers.
Some of these challenges are highlighted within a recent study by Cardiff-based fast growth business Sonovate.
Its Future World of Work Report 2023 reports on a survey of 4,500 people (including 500 small and medium-sized business owners) on the flexibility within the workforce following the Covid pandemic and how businesses should respond.
First, it’s clear the balance between the employer and employee has changed with half of small businesses believing that the current market conditions favour candidates.
Part of the solution in getting the best people has been increases in salaries to attract talent. However, businesses will not be able to sustain this for long given the current economic situation and other benefits, including flexible working, may be the option to attract and retain the next people.
In fact, the movement towards increased flexibility in the labour force may be reflected in the finding that two thirds of businesses are expecting a shift towards their workforce being made up of freelance or contract workers. Interestingly, most employers are not surprised by this trend as the pandemic altered their views about whether jobs should be based permanently within the office.
The recent cost of living crisis is also changing the way employers approach flexible working with the cost-of-living crisis prompting people to make changes to the way they work. Employers are responding positively to this challenge with two thirds saying they support flexible working to help their workers navigate financial difficulty. Yet whilst these sentiments are to be welcomed, the reality is that only one in five businesses are actively creating more remote working opportunities to help staff reduce outgoings.
Another key finding from the study is that two thirds of businesses believe that they will need to create flexible working environments to attract the skills they seek. However, it is not only employees that will benefit for this trend as employers see several advantages from adopting a more flexible approach to work including addressing the skills gap, buying in specialist support when it is needed and creating a more diverse and productive workforce.
But what type of flexible working is favoured by businesses? The survey suggests that the key reasons for employers include allowing workers to choose their own hours, accepting requests to move from permanent to temporary contracts, providing employees with utilities and internet subsidies to work from home, and enabling workers to choose which, or how many, days they work.
Yet many businesses are not set up technologically or operationally to offer the sort of flexibility that workers are seeking, especially in enabling employees to communicate effectively, coordinate projects and workflows. The good news is that they are introducing practices such as setting up home office IT for workers and implementing the use of project management or communication software that allows for co-working across multiple locations.
Therefore, the Sonovate study shows that, rather than returning to normal, the world of work continues to change with the needs of employees for greater flexibility being one of the key factors that businesses must engage with properly if they are to get the best out of those working for them. As flexible working becomes the norm, businesses themselves must invest in the right organisational structures that enable them to work with the best talent in the future.
That talent will have expectations that they have the right to choose to work how they want but also, on the flip side, businesses will expect that they can choose when and how they tap into that talent, especially as more freelancers make up the labour force.
There are examples of high-profile companies having recently embraced flexible working. For example, the accountants PWC have introduced several new work practices including the freedom for workers to decide the most effective working pattern on any given day.
In addition, the recent debate over the four-day week has focused on how it can bring benefits to many businesses including improving productivity, attracting and retaining talent, and cutting down on costs associated with stress and burnout.
Unfortunately, such developments are the exception rather than the norm and if the UK is to make the most of the potential of its labour force at a time when the economy is struggling, then businesses must be further encouraged to embrace those practices to maximise the talent that leads to greater productivity and competitiveness.
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